Do we have to sell our current home before buying our next home?
Question of the week: Do we have to sell our current home before buying our next home?
Answer: Maybe. Maybe not.
In the piranha-like feeding frenzy real estate market during the pandemic, and following, very few, if any, sellers would accept an offer from a buyer with a contingency.
A contingency being that certain conditions must be filled before the contract is fully in effect; i.e. contingencies give either party an “out.”
The sale-contingency is used by buyers who need the equity from the sale of their current home for down payment on a new home, and/or to eliminate the housing payment so they can qualify for the mortgage to purchase their new home.
Real estate markets that are level or tilted in the buyer’s favor see a decent percentage of offers accepted by sellers that are contingent on the buyer selling their home. In the past, it was not unusual to have multiple transactions lined up on contingencies—I believe the most I had was five homes in a row all depending on the first home closing before the next could then close in order, I remember this as two of the buyers for homes in the chain were my clients.
Over the past decade plus, sellers have rarely been accepting offers contingent on the buyers selling their home. Simple reasoning, there has been multiple offers on most listings and many buyers are able to make non-contingent offers.
Our current markets have seen a slow down in sales as homes are on the market longer before entering escrow due to slower demand and increasing inventory. A market that is shifting is a market where contingencies come back to the negotiating table. Sellers may not, perhaps should not, discount contingent offers without knowledge of the situation and chances contingent offer will successfully close.
If you need equity from your home, or the elimination of your housing payment, to purchase a new home, the market appears to be heading your way in regards to contingencies.
If you are buying with a contingency of your home selling, there are a few considerations. First, you will not have forever to sell your home. Your contingency will most likely have a “sold-by” date or the seller can cancel the transaction; i.e. buyer must enter escrow on the sale of their home within 10 (or 14, or ??) days from date of acceptance of the offer and close withing 30 (or 40, or ??) days thereafter.
Since this is the case, it would not be wise to list your property for sale at the very top possible price. In a market that is slowing, trying to get “top-dollar” will likely take time, that you may not have.
To avoid a contingency, there are loan programs where the lender loans you funds based on property value and loan balance on your current home for down payment, and funds to purchase the new home. They will enable you to controls the sale of your home, but if it does not sell within a stated time frame, they can (and will) reduce the sales price to get the property sold and be repaid the funds they put forth for down payment and closing.
Depending on your income and qualifying ability, you may be able to purchase your new home without selling your current home, and leverage into the new home, paying down purchase debt after your home sells and you receive the proceeds.
Do you need to sell your home to buy a new one? I don’t know, but a conversation regarding your financial situation and what you are trying to do can answer the question.
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Rates for Friday February 27, 2026: The conforming rate is flat for another week, investors seem to be taking a moment to digest a lot of speeches, comments, and what-ifs…
FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS FOR PURCHASE TRANSACTIONS:
30-year conforming 5.625% Flat
30-year high-balance conforming 5.875% Down 0.125%
Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down with 740 FICO score for purchase mortgages.
What an exciting end to the Winter Olympics with the United States Men’s Hockey Team defeating Canada in overtime. The last time the men brought home the gold was in 1980 at Lake Placid—the highlight being their win over the Soviet Union in the “do you believe in miracles game.” The story almost was lost however if they did not come from behind to beat Finland in the gold medal.
In a coincidence for me, and about 20 of my high school classmates, I was in the site of this year’s Olympics for the 1980 Miracle team’s win over the Soviets. Every year for the Mardi Gras winter break students and parents at the International School of Brussels would organize ski trips to different areas in France, Switzerland or Italy. In my senior year of 1980 the trip I went on went to Cortina d’Ampezzo, Italy.
The USA v USSR hockey game was on at night for us and it was on a television in the bar where we frequented during our trip (remember—Europe, lower drinking age). We were not really paying close attention to it as, like everyone else, we expected a blowout by the Soviets. But…the noise go a little louder and louder as the Americans were making a game of it. Soon the whole bar was watching, cheering, shouting and when the game was over this table of American students was being congratulated by Italians, Germans, French, Swiss, who were thrilled to see the Soviets being defeated. There were not a few bottles of beer put before us as well.
Walking back to the hotel later, and the next day in town and on the slopes, we were congratulated again and again. Needless to say, we were all very proud to be representing our country in accepting congratulations for the win.
There is an excellent documentary, “Miracle: The Boys of ‘80” on Netflix I encourage everyone to watch as it captures more than just the game—the national and internation moods, economic and social issues—that heightened the meaning of the men’s victory.
One final note, lost in all the excitement for the men’s win is the United State’s women’s team also beating their Canadian opponents, also in overtime.
